Ethanol Tax Incentive Extension Could Save 112,000 Jobs

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Extension of the Volumetric Ethanol Excise Tax Credit (VEETC) would save 112,000 jobs according to a new report. If the credit is allowed to expire at the end of 2010, it is estimated that U.S. ethanol production capacity, regardless of feed stock, would decrease by 38 percent thus eliminating nearly 30 percent of the 400,000 jobs the ethanol production industry supports today. Notably, the projected job lost would impact rural communities most heavily.

“The extension of VEETC is a top priority at NCGA because we understand how crucial this issue is to grower profitability,” said NCGA President Darrin Ihnen, a grower from Hurley, S.D. “Allowing the VEETC to expire would not only harm farm profitability though. By allowing this credit to expire, our government is moving away from furthering a viable source of domestic fuel.” The report, entitled “Importance of the VEETC to the U.S. Economy and the Ethanol Industry,” was prepared by economist John Urbanchuk, Technical Director at ENTRIX, and commissioned by the Renewable Fuels Association. (See a summary here.)

Tax incentives for ethanol routinely pay for themselves. In 2009, the outlay from the Federal Treasury for VEETC and the Small Producer Tax Credit totaled $5 billion. By comparison, the Federal Treasury saw $8.4 billion in increased revenues from the ethanol industry. This signifies a net positive return of $3.4 billion. This figure does not take into account additional positive returns in the form of increased state and local taxes, increases in household income and savings resulting from decreased oil imports.

By extending VEETC, the United States could avoid: • Loss of more than 112,000 jobs in all sectors of the economy. • Reduction of domestic ethanol production by 38%. • Increased reliance on imported motor fuels. • Loss of investment in and support for second-generation biofuels. • Reduction of household income by $4.2 billion (2009 dollars)

The National Corn Growers Association urges growers and supporters to make their voices heard by contacting their representative in federal government and stressing the importance of extending VEETC to both growers and rural communities. To use NCGA's letter assistance resource click here.